The name of the GAMI: How four friends turned chicken and beer into a $25 million company
Wednesday, November 7, 2018/
The origin story of Korean chicken and beer chain GAMI is one co-founder Jun Lee admits isn’t particularly inspirational or profound.
“Everyone has a point in time where they think about starting a business with their friends, and for us that was when we were second-year uni students, sitting around with a beer in our hands,” he tells SmartCompany.
That was back in 1996, and Lee and his three mates thought they were indulging each other in a fantasy which would likely never come to fruition, despite the co-founder admitting they each had complementary skills.
And as each finished their studies — two becoming chefs and two going into corporate IT jobs — it seemed the dream would stay exactly that.
Years later, each of the four with flourishing careers, they met again near the bar where the initial promise was made. Lee says he’d all but forgotten about the four’s plan to start a business together, but one of his friends brought it up, again while they were enjoying a beer.
“With two of them being chefs, we got talking a lot about food, and they mentioned how big Korean fried chicken is in Korea just due to the huge number of stores,” he says.
“In Australia at the time there were none, and though we could have tried to bring in a Korean franchise, we decided to do something ourselves.”
So in 2006, the first Gami Chicken & Beer location opened its doors in Carnegie, Melbourne.
In its first few years, GAMI pulled in a reasonable $1.2 million in revenue as Australians were slow to catch on to the Korean fried chicken craze, and it wasn’t until 2009 that the company opened its second store, this time in Melbourne’s CBD.
Today, the business has 19 stores across the country and did nearly $25 million in revenue in the last financial year. Since 2011, the company’s sales have grown an eye-watering 1091%.
“We didn’t even realise we were growing that much,” Lee laughs.
“We’d just open our books at the end of the fiscal year and go: ‘Wow we grew, how did we do it?’”
Again, the formula to GAMI’s success involves no secret sauce (apart from what accompanies the chicken) nor any grandiose expansion strategy or execution. Looking back, Lee believes the business thrived due to the founders simply following their passion and making food for customers who loved to eat it.
“It was just all of us trying to focus on our core values, which is to have a casual dining setting where you can eat tasty chicken and beer. It’s not that complicated,” he says.
GAMI is forecasting revenue of over $40 million for the next financial year and has plans to open 45 stores by 2020. In a seemingly recurring theme, Lee’s plans for growth are simple: Aussies love chicken, and GAMI sells chicken.
“There’s a lot of chicken restaurants in Australia, and we have an advantage because we’re bringing something new to the table. It’s the most-consumed meat in Australia at the moment, so people are more exposed to chicken than ever before,” he says.
“We want to be like the local pub for Australian people, rather than a niche market. I wish I could say we have a big expansion model or something, but it’s not really like that.”
Lee, who works as GAMI’s marketing director along with being a co-founder, is also planning to pour his time into building out the story attached to the company, saying 2018 is the first year he’s had the chance to really start to roll out significant marketing in relation to GAMI.
This involves increasing the company’s brand awareness, currently sitting at just 7% amongst Victorians, and ensuring all of its stores are in line with the business’ core values. So far his efforts have seen the numbers increase, which he says is a “very good sign”.
“It’s still a very organic approach to growth. In the last few years we’ve seen too many brands expand too fast and fail because of it,” he says.
Finding franchise success
A number of GAMI’s 19 stores are currently franchised and are managing to thrive in a retail environment which has seen tough times fall on a number of Australian franchise groups. Most recently, Max Brenner shut its doors in Australia, and Retail Food Group announced the closure of over 250 stores.
GAMI’s approach to franchising was largely influenced by Lee’s former experience being a franchisee of a coffee franchise in Australia, which “didn’t go well” and left him disappointed in the entire system. In establishing GAMI’s franchise model, he says he wanted to make sure the franchisees were truly put first, saying their success is essential to the overall success of the brand.
“Growing a business in the hospitality sector is like growing a tree. You can’t do it overnight,” he says.
“Our future growth relies on the revenue of each individual store growing, it has to be brand-wide. We want to help our franchisees make more money.”
To do this, the company takes some unique steps. For new franchises, the franchising fee GAMI takes is waived for the first three months while the store gets its sales on track, with Lee saying the company doesn’t want to “take the value out of the business from day one”.
GAMI also waives the marketing levy for the first 12 months to help the business better penetrate its local market, which Lee says helps the store build a better foundation which will, in turn, ensure its success for the future.
“I think a lot of franchises are not doing well at the moment because they’re too focused on expansion and they’re not paying attention to things like quality assurance,” Lee says of the wider franchise space.
“In general the food industry in Australia is really tough, with the dollar getting weaker and weaker and the costs of goods going up. It’s also a very trendy industry and everyone’s a critic, so it can be hard to drive customer loyalty.”
“I want GAMI to be something better. I want people to say ‘I love that place’.”